What is a Minors Compromise?

What is a Minors Compromise?

Posted By
Effres & Associates

A personal injury settlement is final - once a case settles, there is no
going back to reopen the case later if it turns out the money was not
enough to cover the harm. For this reason, you really cannot settle your
case without a thorough understanding of its value. Your personal injury
lawyer is the best person to help you evaluate the merit of your case,
the nature and extent your harm, and all possible sources of recovery
to determine the proper settlement value.

If your personal injury case does settle, several things need to happen
before you can be compensated: the written settlement agreement/release
must be executed, all medical liens must be accounted for, and - if the
case is in litigation - the trial court and all parties must be notified per
California Court Rule 3.1385. The settlement agreement/release is a legally binding contract, so your
personal injury lawyer is the best person to negotiate its terms so that
no unnecessary strings are attached. Your personal injury lawyer will
also make sure all medical liens are accounted for and reduced so as to
maximize your net recovery and prevent any claims for reimbursement down
the road. If your case is in litigation, your personal injury lawyer will
protect you from incurring any unnecessary delays or sanctions.

Minors generally lack the capacity to enter into contracts, so cases involving
minors can be more complicated. A written settlement agreement/release
executed by a minor could be voided by the minor until he or she turns
18. For this reason, insurance company adjusters will not pay personal
injury settlements over $5,000 for a minor without a court order approving
the settlement so it is final and not voidable. This court order is obtained
through a
petition by a parent or guardian ad litem and, if the gross settlement exceeds
$50,000, a hearing where the judge can ask the minor questions to make
sure he or she understands that the settlement is final. The whole process
is known more generally as a
minors compromise.

The purpose of a minors compromise is to protect the interests of the minor.
Since approval means that the personal injury settlement is final and
not voidable, the court scrutinizes the settlement to make sure it is
fair. Factors that courts consider include the gross settlement amount,
the severity and permanency of the injuries, the amount of attorney fees
and costs that will come out of the settlement, and where the funds will
go if the personal injury settlement is approved.

Courts want assurance that the funds will be used solely to benefit the
minor. Unless the funds are needed to pay for ongoing medical care or
basic necessities like food and shelter, the funds will almost always
be ordered into a blocked, interest bearing account or
structured settlement annuity. Nobody - not even the minor or the minor's parents or guardian
- will have access to the funds, except for the minor on his or her 18th birthday.

If the personal injury settlement is approved, the settlement is processed
and the funds go into the blocked account as per the order. The petitioner
and the personal injury lawyer then have typically 30 days to provide
proof to the court that the money has been received and deposited. Once
this happens, the personal injury settlement is complete.

The minors compromise is an important safeguard for minors who are injured
due to someone else's negligence or carelessness, but it can be complicated
and it includes several traps for the unwary. If you or a loved one is
injured, be sure to contact your personal injury lawyer right away so
that you know the case will be handled correctly.